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Columbia Ribbon & Carbon Mfg. Co. v. A-1-A Corp. - 42 N.Y.2d 496, 398 N.Y.S.2d 1004, 369 N.E.2d 4 (1977)

Rule:

Since there are powerful considerations of public policy which militate against sanctioning the loss of a man's livelihood, restrictive covenants which tend to prevent an employee from pursuing a similar vocation after termination of employment are disfavored by the law. Such covenants will be enforced only if reasonably limited temporally and geographically, and then only to the extent necessary to protect the employer from unfair competition which stems from the employee's use or disclosure of trade secrets or confidential customer lists.

Facts:

Defendant William Trecker was employed in a sales capacity by plaintiff Columbia Ribbon and Carbon Manufacturing Co., a manufacturer and supplier to the word and data processing industry. Trecker signed an employment agreement containing a restrictive covenant regarding competition with Columbia Ribbon. Following Trecker's demotion from sales manager to salesman, he terminated his employment with plaintiff and obtained a position with defendant A-1-A Corporation, a competitor of Columbia Ribbon. Columbia Ribbon then sought to enforce the restrictive covenant by enjoining Trecker from competing with it "in the United States for a period of two years" and to restrain him permanently from soliciting or selling to customers that he had serviced while in its employ. On cross motions for summary judgment, the trial court dismissed Columbia Ribbon's complaint, which the appellate division affirmed. Columbia Ribbon appealed before the Court of Appeals of New York.

Issue:

1. Was the restrictive convenient between the parties not valid for public policy considerations?

2. Was the plaintiff correct in arguing that the impermissible parts of the contract should be severed from the valid part and be enforced by virtue of equitable considerations?

Answer:

1. Yes. 2. No.

Conclusion:

1.The Court found that it was clear that the non-compete agreement was invalid because its broad-sweeping language was unrestrained by any limitations keyed to uniqueness, trade secrets, confidentiality or even competitive unfairness. It does no more than baldly restrain competition.

2. The Court affirmed the grant of summary judgment, finding no basis on which to grant equitable relief. It failed to how that any secret information was disclosed, that Trecker performed any but commonplace services during his Columbia employment, or, for that matter, that there was any evidence of lost business, lost customers or other damage. Its only thrust in this direction is to allege, generally and without as much as a hint of time, date, place or actual orders, that Trecker solicited two of its customers.

The Court affirmed the appealed decision.

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